BOFIT Discussion Papers, Institute for Economies in Transition, Bank of Finland
No 14/2005:
Cross listing and firm value - corporate governance or market segmentation? An empirical study of the stock market
Gang Ji ()
Abstract: This study investigates the economic consequences of
cross-listing on the Chinese stock market. We argue that by adopting a
higher disclosure standard through cross- listing firms voluntarily commit
themselves to reducing information asymmetry. As a result, cross-listed
firms are able to benefit from growth opportunities with less appropriated
cash flow and lower cost of capital. The empirical evidence shows that
cross-listed firms indeed command higher valuations than their
non-cross-listed counterparts, after controlling for certain firm-specific
attributes. This lends support to the corporate governance hypothesis of
cross-listing on the Chinese stock market. The study also argues that an
overall upgrad-ing of accounting standards cannot substitute for the
cross-listing mechanism.
Keywords: corporate governance; listing; China; (follow links to similar papers)
36 pages, November 11, 2005
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